High-Yield Holding Up Amid Stock Market Sell-Off

By The Financial Lexicon:During the stock market sell-off last Thursday and Friday, the S&P 500 and Dow Jones Industrial Average pulled back 2.37% and 1.74% respectively. Furthermore, crude oil got hit very hard, dropping more than 6%, the Australian dollar, corn, and soybeans each sold off, and Treasury yields dropped. Essentially, it was the typical so-called "risk-off" market environment. However, there was one notable exception: high-yield corporate bonds.Usually, when you get a 1%+ single-day drop in the major market indices, high-yield corporate bonds will also show notable weakness. This makes sense, as companies with lower-rated debt are regarded as more sensitive to changes in the economy. Therefore, if stocks are selling off due to perceptions about a weaker economy ahead, high-yield often sells off in concert. In fact, if you overlay a chart of the S&P 500 with that of either of the two popular high-yield corporate bond ETFs, JNK and HYG,Complete Story »

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By The Financial Lexicon:In "Lay Off The High-Yield Bonds For Now," I noted that both investors and traders of high-yield corporate bonds should exercise caution based on where high-yield bonds were trading near the end of February.

By Tom Lydon:
Exchange traded funds tracking the S&P 500 and Dow Jones Industrial Average suffered declines of more than 4% in Thursday’s stock market thumping. Yet in the bond ETF universe, the steep pullback in high-yield corporate bond funds was another example of the “risk off” trade in force on Thursday.

NEW YORK: Metals prices hit multi-year lows, and stock markets and oil prices declined on Friday, as weaker-than-expected data from China and the euro zone exacerbated concerns over global economic growth. Declines in energy and materials shares weighed on U.S. stocks, along with a 1.4 percent drop in the S&P health care index. Biogen shares dropped 16.9 ree-month copper on the London Metal Exchange fell to percent to $320.11 after it cut its 2015 earnings and revenue forecasts.

A seven-week streak of stock market gains abruptly ended this week amid investor concerns about the continued decline of oil prices and sluggish European and Asian economies.
A sell-off Friday cemented the loss with the Dow Jones Industrial Average tumbling 316 points, or 1.8%, to close at 17,281. For the week, the blue clip index slid 3.7%, the worst showing since November 2011.

A seven-week streak of stock market gains abruptly ended this week amid investor concerns about the continued decline of oil prices and sluggish European and Asian economies.
A sell-off Friday cemented the loss with the Dow Jones Industrial Average tumbling 316 points, or 1.8%, to close at 17,281. For the week, the blue clip index slid 3.7%, the worst showing since November 2011.